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LatinNews Regional Monitor: Brazil & Southern Cone - 06 June 2019

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In brief: Brazil

* The index for Brazil’s São Paulo stock exchange (Ibovespa) has fallen 1.42%, closing the day at 95,998 points, in reaction to uncertainty over the government’s political agenda. A congressional vote on a proposal to free up R$248.9bn (US$64.1bn) in credit, to help the government avoid being in violation of the so-called ‘golden rule’ (which bans debt issuance to fund current spending), was postponed after the mixed congressional budgetary committee failed to reach an agreement. Rumours that the government might consider raising its spending cap (another fiscal rule it is close to violating) after a pension reform is approved by congress also spooked the markets. The economy ministry has responded to this by releasing a statement assuring that it is not planning on proposing changes to the federal spending cap. “The Ministry reiterates the importance of controlling public spending so that the country can regain the balance of public accounts”, the note reads.